Dongfeng Motor Corp., a Chinese state-owned automaker, is preparing for a potential entry into Canada as the country begins allowing a limited number of Chinese electric vehicles to enter under a lower tariff rate. The company is displaying models including the Vigo and Nammi Box 01 at an event in Montreal on Tuesday while completing the regulatory certification required to sell vehicles to Canadian customers. Julie Mazorra Fernandez, director of North World Industry, Dongfeng's planned Canadian distributor, said the company is working toward introducing its first two models as early as next year. The Montreal event is expected to help Canadian consumers become more familiar with Dongfeng's vehicles before the company moves toward commercial sales.
Canada had largely closed its market to Chinese-made EVs in 2024 after former Prime Minister Justin Trudeau imposed a 100% duty on top of the existing 6.1% tariff. The measure forced Tesla NASDAQ:TSLA, a U.S. electric-vehicle manufacturer, to adjust its supply chain and prevented Chinese brands from gaining a meaningful position in the Canadian market. Prime Minister Mark Carney changed that policy in January through an agreement with Chinese President Xi Jinping, removing the additional duty on as many as 49,000 Chinese EVs during an initial one-year period. In exchange, China dropped duties on certain Canadian agricultural products, while Canada is expected to gradually increase the number of Chinese vehicles eligible for the lower tariff in future years.
Tesla is currently the only automaker making widespread use of the quota, importing thousands of vehicles produced at its Shanghai factory. BYD Co. (BYDDF), a Chinese automaker seeking access to the Canadian market, and Chery Automobile Co., another Chinese vehicle manufacturer, have also indicated that they hope to begin using the quota. Dongfeng may eventually pursue manufacturing opportunities in Canada and already works with Stellantis NV NYSE:STLA, a global automaker, and Nissan Motor Co. (NSANY), a Japanese vehicle manufacturer, through joint ventures that build cars in markets including Europe and South America. Carney has suggested the agreement could lead to substantial Chinese joint-venture investment with trusted Canadian partners, while Industry Minister Melanie Joly said Chinese automakers are studying possible Canadian manufacturing partnerships, developments investors may view as early indications of rising competition and potential investment across Canada's EV industry.